Colleen is intoxicated, but still mentally capable of understanding the consequences of
her actions when she signs a contract to sell the rights to her latest novel to Addie. The
contract is
a. enforceable only if Colleen does not attempt to disaffirm it.
b. enforceable even if Colleen attempts to disaffirm it.
c. unenforceable if Addie attempts to disaffirm it.
d. enforceable only if Addie does not attempt to disaffirm it.
Albert buys a surround sound system from his neighbor George at George’s garage sale.
Albert writes George a check for $250 for the sound system. George is
a. the certifier.
b. the drawee.
c. the drawer.
d. the payee.
Andy obtains an insurance policy that protects him against some risks of loss to the
contents of his residence. This is
a. homeowners’ insurance.
b. title insurance.
c. casualty insurance.
d. liability insurance.
Bayou Development Corporation (BDC) hires Gulfview Brokerage Associates to sell
the condominiums in a building at BDC’s coastal resort. The agency will terminate
a. after the condos have been sold.
b. if the prices of the condos must be reduced to sell them.
c. once BDC obtains insurance to cover the property.
d. when BDC pays Gulfview its first commission.
Mike owes $12,000 to Nora, $6,000 to Owen, and $6,000 to Pat. The three creditors
enter into an agreement with Mike to discharge the debts on payment of a sum of
$12,000 to them, to be divided proportionately. This is
a. a creditors’ composition agreement.
b. a guaranty agreement.
c. a judicial lien.
d. a suretyship agreement.
MeatMen, Inc. spends a great deal of money and effort to ensure that all employees are
safe on the job, that all products are safe for consumers, and that the environmental
impact of the corporation is minimal. MeatMen appears to strongly believe in the
concept of
a. the moral minimum.
b. corporate social responsibility.
c. “grey areas” in the law.
d. government oversight.
John steals an old, battered bicycle that is parked, unlocked, in front of a convenience
store. He repairs, paints, and replaces parts on the bike until it is like new. The original
owner, Kim, claims the bike. The bike belongs to
a. John and Kim as tenants in common.
b. John because he made substantial improvements to it.
c. John because Kim claimed it only after John improved it.
d. Kim because John stole it.
Martin, a U.S. citizen, feels that a recently enacted federal law is unfair. He assembles a
group of friends and they write a petition to the government. Martin and friends then
stand quietly in front of the White House with signs declaring their belief that the law is
unfair. Under the First Amendment, Martin has a right to
a. petition the government, but not to assemble a group peaceably.
b. assemble peaceably, but not to petition the government.
c. both petition the government and assemble peaceably.
d. neither petition the government nor assemble peaceably.
Dina asks Edie to co-sign a credit application so that she can borrow money and buy a
truck from First Street Motors. If, after the loan agreement is signed, Dina agrees to a
higher rate of interest without telling Edie, then Edie is
a. discharged from the agreement.
b. liable at the higher rate of interest.
c. liable at the lower rate of interest.
d. liable for the principal only.
Good Food Corporation buys from Home Farms, Inc., a rice crop that Home Farms
plans to plant and harvest during the next growing season. Good Food plans to sell the
rice to Interstate Grocery Stores. After the rice is planted, but before it is harvested, an
insurable interest in the rice exists in
a. Good Food and Home Farms, but not Interstate Grocery.
b. Good Food, Home Farms, and Interstate Grocery.
c. Good Food only.
d. Home Farms only.
Tom and Bill are partners in Tough Trucks Towing. James is not a partner. In dealing
with Fred, James holds himself out to be a partner in Tough Trucks Towing and Fred
contracts to have Tough Trucks Towing tow some vehicles for him. If Tough Trucks
fails to tow the vehicles, a court may conclude that
a. a partnership by estoppel exists and James is liable to Fred.
b. no partnership exists and James is not liable to Fred.
c. a partnership by estoppel exists and Fred has all partnership rights.
d. no partnership exists, but Tom and Bill are liable to Fred.
Tyler, a citizen of Utah, files a suit in a Utah state court against Veritas Sales
Corporation, a Washington state company that does business in Utah. The court has
original jurisdiction, which means that
a. the case is being heard for the first time.
b. the court has a unique method of deciding whether to hear a case.
c. the court has unusual procedural rules.
d. the subject matter of the suit is interesting and new.
Allison is a nurse. She loses her job and defaults on the mortgage on her home. Because
there is a high demand for nurses in the town where Allison lives, Cash Bank, Allison’s
lender, believes that Allison will be able to find a new job quickly. Cash Bank agrees to
postpone Allison’s payments on her loan for three months rather than foreclosing. This
is
a. forbearance.
b. mercy lending.
c. foreclosure.
d. predatory lending.
Pola and Quincy want to form and do business as River Tours Corporation. A
corporation is owned by
a. the board of directors.
b. the officers.
c. the employees.
d. the shareholders.
Richard is an avid baseball fan and attends baseball games whenever he can. Richard
considers himself an expert on all things, including risks, related to baseball. One day a
ball flies into the stands, hits Richard in the head and seriously injures him. Richard can
probably successfully win a case against the sports stadium based on
a. negligence.
b. breach of duty of care.
c. defamation.
d. none of the choices.
O.K. Oil holds itself out to others as being a corporation but makes no attempt to
incorporate. In this circumstance, O.K. is most likely
a. a corporation by estoppel.
b. a de facto corporation.
c. a de jure corporation.
d. ultra vires.
Jack contracts to provide lawn-mowing services to Lee. Jack cannot delegate this duty
a. because it is a personal service contract.
b. without continuing to be liable.
c. without Lee’s consent.
d. without providing lawn-mowing services to Kim.
Winifred leases an apartment from Lakeside Apartments. When the lease ends, Winifred
refuses to leave the apartment and stops paying rent. Lakeside Apartments can collect
damages
a. based on the fair market rental value of the apartment.
b. up to half the rental value of the apartment.
c. up to twice the rental value of the apartment.
d. up to one-third the rental value of the apartment.
ValuRich Tools, Inc., sells tools, tool parts, and related supplies under “full” warranties.
Under the Magnuson-Moss Warranty Act, this means that ValuRich must provide
a. a choice between a refund or replacement if a product cannot be fixed and repair or
replacement of defective parts.
b. neither a choice of a refund or replacement, or repair of defective parts.
c. only a choice of a refund or replacement if a product cannot be fixed.
d. only repair or replacement of defective parts.
Some agreements are so blatantly and substantially anticompetitive that they are
deemed illegal per se under Section 1 of the Sherman Act. Which of the following is
NOT a per se violation?
a. A price-fixing agreement
b. A group boycott
c. A trade association
d. A market division
Grady and Hedley do business as Island Tours. For federal income tax purposes, Island
Tours would be treated as
a. an aggregate of the individual partners.
b. a natural person.
c. an independent entity.
d. a non-existent party.
Daphne defaults on a debt to Country Loan Corporation (CLC). As a creditor, CLC can
place liens on all of Daphne’s property except
a. motor vehicles used to commute to work.
b. stock in various corporations.
c. items that the debtor selects.
d. vacant commercial property.
Housemate, Inc., makes and sells a variety of household products. With a fair amount of
certainty, Housemate’s decision makers can predict whether a given business action
would be legal in
a. all situations.
b. many situations.
c. no situations.
d. practically no situations.
Ruth executes a will in 2009 naming her nephew Stan as sole beneficiary. In 2011, Ruth
executes another will, naming her niece Tammy as sole beneficiary, but does not state
that she is revoking the previous will. On Ruth’s death
a. Stan and Tammy will share the estate in equal shares.
b. Stan will be the sole heir.
c. Tammy will be the sole heir.
d. the estate will pass as if there were no will.
Brendan signs a check “pay to the order of City College Bookstore” drawn on his
account in Delta Bank to pay for his current semester’s textbooks. The bookstore
deposits the check in its account in Eagle Bank. Like most checks, this check is
a. a one-party instrument.
b. a nonnegotiable instrument.
c. a type of draft.
d. not a substitute for cash.
Fact Pattern 24-1: Jake is the maker of a $2,000 promissory note payable to Kim. Kim
indorses the note to Lou who, in turn, indorses it to Mona, who then indorses it to Nat,
the present holder.
Refer to Fact Pattern 24-1. Nat properly presents the note to Jake for payment, but Jake
dishonors it. With timely notice to the proper parties, Nat may collect payment on the
note from
a. Kim, Lou, or Mona.
b. Kim or Lou only.
c. Mona only.
d. no one.
City Manufacturing Corporation conditions shipments of its products to Exurb Stores,
Inc., on Exurb’s agreement not to buy products from Fresh Works Company, City’s
competitor. This is
a. an exclusive-dealing contract.
b. a tying arrangement.
c. price discrimination.
d. a unilateral refusal to deal.
GR8 Fashion, Inc., complains to the Federal Trade Commission (FTC) about an ad
broadcast by Hotte Clothes Company, GR8’s competitor. The FTC investigates and
concludes that the ad is deceptive. The FTC’s next step is to
a. conduct negotiations between the competitors.
b. draft a formal complaint.
c. issue a cease-and-desist order.
d. permit GR8 to broadcast similarly deceptive counteradvertising.
Equipment Rental Corporation and Floodlights, Inc., are parties to an oral agreement
for a lease of goods with payments in excess of $10,000. They may satisfy the Statute
of Frauds by
a. mutually agreeing not to commit fraud.
b. restating the terms in a phone call.
c. setting out the terms in an e-mail.
d. shaking hands on the deal.
Superior Home Products, Inc., is a corporation. Superior’s implied powers enable it to
a. amend the articles of incorporation.
b. bring a derivative suit.
c. declare dividends.
d. borrow funds, extend credit, and make charitable contributions.
A federal administrative agency may exercise only those powers that Congress
delegates to it.
If a lessee wrongfully refuses to accept goods that conform to a contract, the lessor
must tender substitute goods.
The Fifth Amendment prohibits unreasonable searches and seizures of persons or
property.
Damages is a remedy at law.
In an abatement, the legatees receive increased benefits.
Scienter exists if a party makes a statement that he or she does not believe is true.
Stored-value cards are a form of digital cash.
An instrument is defective if it has been previously dishonored.
With a tenancy at will, only the tenant can terminate without notice.
To be a holder, a person is required only to have possession of a negotiable instrument.
One necessary element for an effective offer is a reasonable price related to market
value.
Tariffs are imposed only on exports.
In general, a buyer’s breach of a contract causes the risk of loss to shift to the buyer.
A mistake of fact can only be mutual.
An oral contract may be enforceable if the person making the promise could foresee
that the promisee would rely on the promise.
If a customer does not have sufficient funds to pay a check available in his or her
checking account and the bank dishonors the check, then the bank is liable to the
customer.
An integrated contract is a contract with more than one subject or part.
A fixed-term tenancy terminates at the end of a specified period without notice.
Sales contracts are governed exclusively by Article 2 of the UCC.